10-KPeriod: FY2009

GOLDMAN SACHS GROUP INC Annual Report, Year Ended Dec 31, 2009

Filed March 1, 2010For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group Inc. (GS) demonstrated a significant rebound in its 2009 fiscal year, reporting a substantial increase in net revenues to $45.17 billion, more than double the previous year's figure. This strong performance was driven primarily by a remarkable recovery in the Trading and Principal Investments segment, particularly in Fixed Income, Currencies, and Commodities (FICC), which benefited from increased client activity and improved market conditions. The firm also saw growth in its Equities business and a notable turnaround in Principal Investments. Despite a decrease in net revenues for Investment Banking and Asset Management and Securities Services, overall profitability saw a dramatic improvement, with diluted earnings per common share rising to $22.13 from $4.47 in the prior year. The firm successfully repaid its TARP obligations and strengthened its capital position, with Tier 1 capital ratios well above regulatory requirements. Investors should note the firm's substantial diversification across business segments and geographic regions, though results remain sensitive to global economic and financial market conditions.

Financial Highlights

30 data points
Beta

Net Income

$13.38B

EPS (Diluted)

$22.13

Total Assets

$848.94B

Free Cash Flow

$48.88B

Financial Statements
Beta
Net Income$13.38B
EPS (Basic)$23.74
EPS (Diluted)$22.13
Shares Outstanding (Basic)512.30M
Shares Outstanding (Diluted)550.90M

Key Highlights

  • 1Net revenues surged to $45.17 billion in 2009, more than double the $22.22 billion reported in 2008, driven by a strong recovery in trading and principal investments.
  • 2Diluted earnings per common share improved significantly to $22.13 in 2009, up from $4.47 in 2008, reflecting a strong rebound in profitability.
  • 3The firm repaid all TARP-related obligations, including the U.S. Treasury's $10 billion investment, preferred dividends, and warrant repurchase, totaling $11.42 billion.
  • 4Tier 1 capital and Tier 1 common ratios remained robust at 15.0% and 12.2% respectively as of December 31, 2009, exceeding regulatory requirements.
  • 5Assets under management grew to $871 billion by year-end 2009, up from $779 billion in the prior year, driven by market appreciation.
  • 6Operating expenses increased 27% to $25.34 billion, partly due to a $500 million charitable contribution and $600 million in real estate impairment charges, but the compensation-to-net-revenue ratio improved to 35.8%.

Frequently Asked Questions

The primary driver of Goldman Sachs' strong financial performance in 2009 was the significant recovery and robust results in its Trading and Principal Investments segment, particularly within Fixed Income, Currencies, and Commodities (FICC). This segment benefited from increased client activity, improved market conditions, and a general tightening of credit spreads.

Goldman Sachs successfully repaid all its TARP-related obligations during 2009. This included the repurchase of the preferred stock and associated warrant from the U.S. Treasury, amounting to a total of $11.42 billion, which covered the original $10 billion investment, preferred dividends, and the warrant repurchase.

Goldman Sachs significantly strengthened its capital position in 2009. Its Tier 1 capital ratio was 15.0% and its Tier 1 common ratio was 12.2% as of December 31, 2009, both well above regulatory requirements. The firm also completed a public offering of common stock, raising $5.75 billion in proceeds.

Net revenues in Investment Banking decreased by 7% compared to 2008, primarily due to a decline in Financial Advisory services, although Underwriting revenues saw an increase. Net revenues in Asset Management and Securities Services decreased by 25% compared to 2008, driven by lower revenues in Securities Services and a decrease in Asset Management, partly due to changes in assets under management and lower incentive fees.